Moneycontrol Pro Weekender | A not-so-quick recipe for investing

What should matter to investors is the fate of corporate earnings growth.

India’s stock market is missing the global AI investment boom, focusing instead on consumer tech and quick commerce. Zepto’s upcoming IPO will intensify competition with Zomato and Swiggy, but margin pressures and market share battles remain key risks.

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While global stock markets are swelling up on the backs of humungous investments in AI, India is missing out much of the excitement for now. Of course, investments in data centres and related areas are happening, and we had even constructed a basket of stocks that could benefit from the build-out.

India's stock market will, however, see more money being sunk into the consumer tech industry. Zepto's IPO, likely to hit the markets soon in early-2026, will keep investor focus sharp in these companies.

Quick commerce promises to remain one of the hottest parts of our stock market in terms of investments and growth of the business. It's a success few other countries have been able to replicate at this scale. Eternal’s (Zomato) debut in 2021 turned investor attention to the sector first followed by Swiggy’s listing. Now Zepto’s listing will occupy the spotlight in the first quarter.

Three of the biggest players in this market will be battling it out in public. After Swiggy’s recent QIP, they had between them Rs 40,000 crore of cash, as reported by Moneycontrol. While the mix of fresh issue and offer for sale in Zepto’s IPO will be known later, it’s fair to assume that a substantial part will be a fresh issue to raise cash for the business.

Some news reports claimed on Friday that Zepto’s issue size has risen to $1.3 billion, from earlier reports of $500 million. If true, the mop-up could be Rs 11,700 crore which will swell the size of the kitty between the three. To this, add the funds being deployed by other private-held contenders in the quick or e-commerce game, and the total investment can be transformative for the sector.

But what are these investments for? Some of it will go into setting up warehouses to service orders, or dark stores as they are called. Some money will also be required to fund working capital, as the assortment is widening, with categories that move slowly compared to FMCG blocking capital. Most of all, the companies spend money to fund their marketing expenses to acquire and retain customers and push sales. Expanding operations into more cities are also likely to be part of the plan.

Some believe this will lead to a war for market share among these three market leaders that could leave them bruised. Investors may then wonder if the investing play is in determining who the winner will be. That may indeed be an outcome but need not be the main play here. Public listings make companies discard a winner-takes-it-all approach, which can lead to deep cuts in margins and erosion in net worth due to losses.

The bigger play lies in taking share away from their main competitors, the traditional kirana traders and the organised retail stores. A recent Kantar Global study had pointed to how the traditional trade’s share of the FMCG channel had come down to 78 percent from 82 percent some years ago. There is significant headroom here for companies to take a higher share of the grocery market, apart from the newer categories such as electronics and general merchandise that they are eyeing.

But what’s certain is that these companies are likely to face margin pressures, not only due to competition but also in their bid for aggressive growth. Both Eternal and Swiggy have seen their shares decline in the past six months. Zepto’s entry will make investors even more nervous. But here’s what our research team had to say in their deep-dive into consumer tech stocks on December 26, “Within the sector, Eternal offers the most balanced risk–reward ratio, combining high-frequency demand, improving profitability and reasonable valuation relative to its maturity. Swiggy follows as a credible medium-term compounding play, with earnings visibility improving as food delivery margins expand and quick commerce losses narrow.”

While there are pockets such as consumer tech, defence, premium consumer discretionary that have narratives for investors to latch onto, the broad market outlook appears to be more dependent on macros. Geopolitical events, America’s changing approach to the rest of the world and its impact on decisions of foreign investors will sway much of the mood next year.

What should matter to investors is the fate of corporate earnings growth. The consensus is that earnings growth will revive and if that optimistic scenario plays out, then a rising tide of earnings can lift several boats. Quick commerce too would be monitored for the same.

For retail investors, it always pays to reassess investing goals and ensure a diversified asset allocation that fits them. 2025 has shown enough examples of how it is difficult to pin down winning asset classes at the start of the year, based on historical performance. Silver outdid gold and large caps outdid mid-caps and small caps in 2025. What’s possible is to be reasonably diversified, patient and discount lost opportunities as a necessary evil in investing.

Even quick commerce requires patience, not hasty bets.

Wish you a happy new year, from the team at Moneycontrol Pro!

Cheers,

Ravi Ananthanarayanan

In case you missed them, here are some of the stories and insights we published this week, apart from our technical picks in the equity, commodity, and forex markets

Investing insights

Shriram Finance, Discovery Series | An FMCG proxy play, Tata Technologies,Aditya Birla Lifestyle Brands, Varun Beverages: Twizza acquisition, Schneider Electric Infrastructure, Yes Bank, Jyoti CNC Automation, Weekly Tactical Pick, Consumer tech stocks.

Markets

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What awaits the bond market in 2026

The coming of age of the Indian crypto investor

Companies and Sectors

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Chart of the Day: Defence contract awards to exceed Rs 2 lakh crore for the second straight year

Ambuja Cements: Structural rejig to drive superior returns

Will India's microfinance sector return to high growth in 2026?

Can Indian boardrooms close the empathy deficit after 2025’s brutal layoffs

Suzlon, Inox: Waiting for the wind to turn

Economy and Policy

Chart of the Day: The currency crumble

Pro Economic Tracker | Auto sales, consumer sentiment improve

Chart of the Day | A year in numbers: What high frequency data say about India’s economic momentum

Data Story: Why 2025 RBI forex operations will influence its actions in 2026

Chart of the Day: Why RBI’s bond purchases would be historically high in FY26

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A billion unserved consumers that can help rescue exporters hit by tariffs

Geopolitics and Geo-economics

Pax Silica and India’s semiconductor reality check

Oman trade deal — India ups stake in Gulf gamble

The Eastern Window: Pakistan under stress test as US pushes it to join Gaza plan

China’s export pivot is posing new risks for Asia’s supply chains

From the Financial Times

America’s risky bet on hydrocarbons might hurt it in the AI race (republished from the FT)

Apollo cuts risk, stockpiles cash in preparation for market turmoil

Tech groups shift $120bn of AI data centre debt off balance sheets

AI upheaval shows little sign of lessening

Start-ups Start-up Street: In 2026, roadblocks are many, as are opportunities